Tourists flocked to Winslow, Ariz., back in the golden era of cross-country rail travel, and later along the classic two-lane highway, Route 66. But now the old Valentine Diner sits empty and rusting, having long given up on luring customers off Interstate 40, which sidestepped the town in the 1970s. It's a symbol of all the Western towns that have also been bludgeoned by interstates and cruise-controlled automobiles that rarely stray beyond the exit-ramp gas stations.

Yet there's more going on in this reservation border town than you might think. Across the street from the diner, the old La Posada Hotel boasts a full parking lot, and well-dressed urbanites stroll among the red shocks of amaranth in the courtyard garden. La Posada epitomizes the way Winslow is being reborn as a spiffed-up community of 10,000 with a burgeoning art scene, in a renaissance that should inspire other Western towns.

The Hopi Tribe first settled this swath of high desert in the 13th century, building Homolovi Pueblo, which is now a state park. Mormon colonists followed in the 1870s, and then the railroad set up camp to take advantage of the water in nearby Clear Creek.

In 1929, entrepreneur Fred Harvey and architect Mary Colter – partners on many landmark Southwestern hotels, including Bright Angel Lodge on the South Rim of the Grand Canyon – built La Posada, "the last of the great railroad hotels." Then railroad travel faded, and in 1957 the hotel went belly-up and became an office for the railroad. When this section of I-40 was completed, siphoning traffic off Route 66, it was like a kick in the gut, and both the town and the hotel deteriorated.

A couple of decades later, much of the town appeared sad, depressed, on the verge of death. Buildings were abandoned, left to the pigeons. A gas station spelled out "God Hates Winslow" on its sign.

A chance for revival appeared in the early 1990s. The railroad wanted to unload La Posada, and the National Trust for Historic Preservation let the world know the crumbling icon was in danger. Allen Affeldt, a California grad student, scraped up enough cash to tap a matching grant to buy it. He roped in his wife, artist Tina Mion, her brother, Keith, and a friend, Dan Lutzick, to undertake the arduous restoration. They had no experience; they were just crazy enough to take it on.

By 2005, La Posada had reopened. Today, the international travel press gushes over the hotel and its Turquoise Room restaurant, which together rival Santa Fe's finest accommodations. Lutzick – the hotel's general manager – has found time to rehabilitate Winslow's old Babbitt Brothers department store (another Southwestern institution) into the Snowdrift Art Space. It's home for Lutzick, his wife Ann-Mary, their dogs and his art – including Sheldon, a former racehorse who died in Little Colorado River quicksand and has achieved immortality as a skeleton on wheels with a glowing pink light ensconced inside its ribcage.

La Posada itself serves as a gallery for Mion's haunting and eccentric paintings. Its wrought-iron gates were made by John Suttman, known nationally for his functional art. Iconic L.A. artist Ed Ruscha visits occasionally – he's listed Winslow as one of his top 10 American towns – and his brother, Paul, turned an old Winslow garage into a giant art studio. Affeldt and company, as the Winslow Arts Trust, plan to turn the old depot into another art space with a light installation by James Turrell, who's doing a famous land-art project, Roden Crater, in a nearby collapsed volcano cinder cone.

Lutzick emphasizes the fact that the arts scene has grown out of the community, not on top of it. He opens the Snowdrift for local Day of the Dead celebrations, parties, movies and an annual model railroading convention. La Posada also hosts local events to bring the community together.

Last September, the Station-to-Station art on rails project, spearheaded by video artist Doug Aitken, enlivened La Posada. It included installation art and performances by Jackson Browne and Cat Power. Art press luminaries from New York and Paris mingled with Winslow locals over Ed Ruscha's legendary cactus omelets. A new generation of tourists is discovering an evolved and artistic Winslow, which Lutzick describes as "real" with "a rough edge that I like." There's more to do now than just stand "on the corner in Winslow, Ariz.," as the Eagles sang more than 40 years ago.